APPENDIX 7
Memorandum submitted by Redcar and Cleveland
Borough Council
1. Redcar & Cleveland Borough Council
has concentrated on the question of whether or not bus deregulation
has worked as this is considered to be most relevant to this authority.
The other questions have then been addressed later in this memorandum
of evidence.
BUS DEREGULATION
2. It is the view of this authority that
bus deregulation has not been successful and that some form of
increased regulation should be reintroduced across the country.
Bus operators have continually reduced the level of bus services
in the area since the introduction of deregulation in 1986 and
this has continued up to the present day. These service reductions
occur irrespective of the views or needs of local people or the
local authority.
3. The operation of the bus system is now
dominated by motives for private bus operators other than the
provision of a public service. This is a problem because of the
lack of competition in the current market, with a declining market
and barriers to entry. The operators are not prepared to provide
services that fulfil a social need unless they also give a commercial
financial return. This is at odds with the current key Government
agendas for the promotion of accessibility and social inclusion
and local agendas for Routes to Work and access to schools and
health facilities.
4. Prior to deregulation, all fare income
and local authority funding was used to provide bus services and
generous concessions for children and pensioners. The availability
of services and cheap ticket prices encouraged use. Cross-subsidisation
took place between more profitable and less profitable routes
and the funding remained within the public transport "loop".
The buses may not always have been full, but by having an extensive
network available, bus use was clearly available as an alternative
for journey making. It was also easier to integrate public transport
policy with other transport policies such as car parking as it
involved the circulation of funding within the authorities involved.
5. Deregulation allowed an influx of private
bus operators to cherry-pick the best routes to operate commercially.
They have reduced service frequencies or abandoned routes altogether
if they do not suit their purposes, irrespective of any social
arguments. The lack of a coordinated network is a disincentive
to travel. This has led to a downward spiral of bus service decline
where the reduction of services leads to a reduction in availability
and public confidence—leading to bus patronage decline and
further service cuts. This is unsatisfactory when the promotion
of bus patronage growth is a key transport objective.
6. The bus operators see their services
as being in competition with rail so they have no special desire
for improved coordination of services. Rail services are more
appropriate for some medium and longer distance journeys. However,
the bus operators do not want to provide services to rail stations
when they are providing similar medium distance services that
would lose patronage. This lack of joined-up thinking prevents
opportunities for members of the public to use the most appropriate
form of transport for their journeys. It demonstrates a lack of
an approach to the development of an integrated transport network
that is a key Government aim.
7. There is not enough funding in the system
to allow several large companies to compete against each other
and still make a profit in any one area. Provision has almost
invariably reduced to one large national operator providing the
bulk of services in each discrete area with smaller operators
providing a limited number of school bus services and supported
public services. This has effectively led to an uncompetitive
market for the provision of bus services. These problems have
disproved the original competition and service improvement arguments
that were put forward for the introduction of deregulation.
8. There have been recent cuts in services
in Redcar and Cleveland within the last month with seven services
withdrawn or rerouted. This has left one village without a bus
service and many other areas greatly inconvenienced. Many passengers
now need to use two buses for their journeys, requiring multiple
fare payments as there are no through journey tickets available.
This also applies to concessionary fare journeys for which the
Council will need to pay. Evidence has not been forthcoming to
justifiy the withdrawal of these services The cuts are having
a serious impact on deprived areas and rural areas where up to
42% of households do not own cars. These areas tend to be around
12 miles from major facilities and are becoming increasingly remote
due to the bus service cuts. This shows a lack of a genuine partnership
approach by the bus operators.
9. Members of the public feel that the service
cuts have come about as a result of the introduction of the free
concessionary fares scheme. They are of the opinion that free
travel is of no benefit if there are no bus services into their
areas at the times when they are most required. There is a view
that people would be willing to pay a small charge for bus passes,
as they did before, so that the money can be used to provide the
services.
10. Particularly from rural areas, many
early morning services to employment, evening services and Sunday
services are only available because they are financially supported
through the local authorities. As Council revenue budgets are
generally hard-pressed from competing public service requirements,
the authorities generally depend on special grant funding such
as Rural Bus Grant (RBG) through the Department for Transport
to be able to provide these services. Annual RBG is allocated
in full but would be ineligible for use on a higher priority urban
service.
11. Problems arise overnight if the operators
give notice of an intention to discontinue a socially necessary
service that is relied on by a particular group of residents.
As budgets are set annually, the Council will not usually be able
to step in with funding at short notice to provide an immediate
replacement. However, if the Council is able to consider a replacement,
the current eight weeks notice period is very short in which to
hold an effective tendering process. Small bus operators do not
have spare vehicles or drivers sitting around waiting for opportunities
to arise, so it is very difficult for them to put together a viable
bid and there are no other major operators competing in the area.
The notice period should be extended significantly to enable effective
competition to take place.
12. It is the view of this authority that
the economic subsidy of socially necessary bus services can only
be achieved if a requirement is placed on operators to support
services in some of the less commercial times of operation. For
example, if an operator intends to run a commercial service from
8.00 am to 6.00 pm then they should also be required to operate
some early morning or evening services on the same route, where
there is a demonstrated need. This would ensure that the operators
would begin to see their operations as a public service that addresses
social needs and concerns such as traffic growth.
STATUTORY REGULATION
13. This seems to be a question that will
be best addressed by the bus operators. However, from a local
authority point of view, the regulations still leave it too easy
for operators to cease operating existing services. As referred
to in paragraph 11 above, the eight-week notice period is very
short for organising effective competitive tendering of replacement
services and should be extended. The Council would like to see
a greater onus on operators to take social responsibilities into
account in their decisions.
14. In our experience, the present system
does not effectively promote competition. We would like to see
changes that would ease entry for smaller, quality operators and
allow local authorities to support social enterprise.
PRIORITY MEASURES
15. This borough has a diverse array of
smaller towns and villages rather than having a single, compact
urban area. There is only one length of bus-only road and no separate
bus-lanes so we are unable to comment on the issue of best practice.
COMMUNITY SERVICES
16. Funding regimes for the provision of
community services, such as the Urban and Rural Bus Challenges,
have always been time limited to two or three years of operation.
As the services are not commercially viable and the Council does
not have other readily available funding sources, the schemes
come to an end, just as the public have begun to rely on them.
Long-term revenue funding sources need to be made available that
are ring-fenced for the provision of transport services.
CONCESSIONARY FARES
17. This Council has been fortunate that
the recent changes to concessionary fares eligibility did not
create a funding black hole. The grant from the Department for
Transport covered the cost of a local scheme that is more generous
than the minimum requirement. However, the bus operators made
it clear that they are not going to carry extra people on their
services for no extra money. Any further extension of eligibility
and operating times will need to be adequately funded. It is important
that DfT properly assess the financial impact of changes on each
authority before determining the final levels of funding.
QUALITY CONTRACTS
18. In current supported bus service contracts,
the authority specifies the standard of service that can be afforded
within the relevant budget. Operators bid with a price that reflects
this standard and then monitoring is undertaken to ensure that
the agreed quality is provided in the operation of the contract.
Quality Contracts would be an extension of this, covering all
of the services on the route rather than just some individual
journeys that need some financial support. The flaw in this is
that it will cost additional money to provide and support a higher
standard of service than would be provided commercially by a bus
operator. Local authorities do not have the additional funding
available that would let them pay for this service. The Government
would need to provide a commitment to fund the cost of Quality
Contracts before councils could consider entering into them.
THE LONDON
MODEL
19. Public transport and other aspects of
transport policy in London have characteristics that are not reflected
throughout the rest of the country. There is a very large and
dense urban area that has very high car parking charges and strict
parking enforcement. This makes a large proportion of the population
captive to the use of public transport, whether bus, rail or Tube.
There are also different operating regimes that enable the provision
of subsidised fares to make the bus services more attractive.
This model may be transferable to other large metropolitan areas
that are sufficiently attractive to businesses and visitors.
20. However, most areas of the country are
not in this situation. We have smaller towns that are more clearly
in direct competition with each other and with out-of-town business
and shopping areas. It is therefore much more difficult for us
to compete and we are unable to introduce the draconian parking
measures that would be necessary to boost bus travel. The realities
of the London bus policy model therefore needs to be viewed realistically
by policy makers in London before expecting it to be a standard
across the country.
THE FUTURE
OF THE
BUS
21. There are many people in this country
who do not own private cars through economic circumstances rather
than through choice. In car owning households, there are also
family members who will not have access to the car at times when
there is a need to travel. All of these people are therefore dependent
on the availability of bus services for medium and longer distance
local journeys. The promotion of accessibility and social inclusion
need to be an important factor in Government policy to bridge
current social and economic division. A situation currently exists
where the railways receive 40% of national transport spending
for the provision of only 6% of transport journeys, that are generally
made by wealthier people. There is a desperate need for some of
this funding to be channelled into local bus service provision
that provides many more journeys for a much lower cost.
23 May 2006
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